Spanish Tax Agency audits Canary Islands fiscal incentives

The Spanish Tax Agency (AEAT) is intensifying its review of tax incentives provided under the Canary Islands Economic and Fiscal Regime (REF). While tools such as the Canary Islands Investment Reserve (RIC) and the Canary Special Zone (ZEC) offer significant tax relief, they require strict adherence to specific conditions over several years.

Failure to meet these requirements can result in tax settlements, interest, and penalties. A notable case involves the airport operator Aena, which has provisioned 14.6 million euros to cover a potential refund. The agency is investigating whether Aena exceeded the maximum state aid permitted by European regulations for its investments in the islands between 2020 and 2022.

Recent rulings from the Supreme Court, the National Court, and the Central Economic-Administrative Tribunal (TEAC) highlight growing disputes regarding invalid investments, insufficient employment levels, or incorrect balance sheet reporting. For instance, the Supreme Court recently ruled against Khatnani SL, determining that an absorbing company cannot use investments previously executed by absorbed entities to justify its own RIC.